Indian equity benchmarks ended a volatile session in the red on Monday, as lower than expected IIP numbers for February and SEBI’s ban on private institutions from selling ULIP products weighed on investor sentiments. Traders ignored positive cues from the European markets.
India's industrial production grew slower than expected in February, and there are fears that it may ease further on expectations that the government may withdraw the economic stimulus and an interest rate hike. Industrial output rose 15.1 percent in February from a year earlier, data showed on Monday. The January industrial output remained unchanged at 16.7 percent.
Last week on Friday, SEBI barred 14 insurers from selling ULIPs without its approval. ULIPs are products similar to mutual funds with an added life cover. However, insurance regulatar IRDA has locked horns with SEBI and asked domestic institutions to continue business as usual.
Market is likely to turn volatile in coming days as India Inc begins to report fourth quarter earnings. All eyes are set on Infosys Technologies as it will present the Q4 results Tuesday and give guidance for the next financial year.
Infosys, in the previous quarter gave a very conservative guidance. Compared to the 1.5% QoQ revenue growth guidance given by Infosys we expect it to show a healthy QoQ revenue growth of 4% in dollar terms. However, in rupee terms we expect Infosys to post almost a flat QoQ growth of about 0.3% due to lower realization owing to rupee appreciation.
Operating margins are expected to decline by 45bps on a QoQ basis. We therefore, expect Infosys to post an EPS of Rs.27.8 for 4QFY10 and the end the year with an EPS of Rs.108.7 as against Rs.107 guided by the company.
The key points to watch out for would be out-performance of the Q4 guidance, lower margins, increase in hedges and full year guidance for FY11,” said Arihant Capital Market preview of Infosys results.
National Stock Exchange’s Nifty closed at 5339.70, lower by 0.41 per cent or 22.05 points from the previous close. The index moved in a range of 5382.15 and 5324.90 intra-day.
Bombay Stock Exchange’s Sensex finished at 17,853.00, down 80.14 points or 0.45 per cent. The index oscillated in a range of 17,995.25 and 17,816.19.
“Indices are likely to face resistance at the 18150-18350-18450/5400-5450-5500 levels (Sensex and Nifty respectively). Any surge in the indices may see profit taking around the indicated resistances. Downside supports are placed at the 17800-17750-17650/5350-5330-5300 levels.
Depending on the global cues we expect to see a upward movement from the mentioned supports and the trades could be influenced by strong moves sectorally. Any move until the above mentioned resistances shall be utilized to exit from long positions and look out for a sustainable move. However, looking at the broader scenario we advise investors to play the broad range movement with caution and strict stop losses,” said Karvy Stock Broking note’s weekly technical report.
The broader market performed better than the bluechips. BSE Midcap Index edged down 0.1 per cent and BSE Smallcap Index was up 0.31 per cent.
Sectorwise, the BSE Capital Goods Index lost 1.25 per cent, BSE Auto Index shed 0.85 per cent, BSE Bankex fell 0.84 per cent. Meanwhile, BSE FMCG Index moved up 0.7 per cent and BSE Realty Index gained 0.57 per cent.
Declines on Nifty were led by Tata Motors (-3.56%), GAIL (-3.21%), Kotak Bank (-2.28%), Larsen & Toubro (-2.11%) and Mahindra & Mahindra (-2.08%).
Nifty gainers comprised Unitech (2.96%), Sun Pharmaceuticals (1.67%), Hero Honda (1.51%), Hindustan Unilever (1.33%) and Tata Steel (1.19%).
Market breadth on BSE remained positive with 1581 advances against 1301 declines.
European markets were in the green and the US markets were also likely to open higher. At 4:20 pm IST, Dow Jones futures was up 0.10 per cent, S&P 500 moved 0.06 per cent higher and Nasdaq 100 gained 0.06 per cent.
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